Fraud crimes can encompass a wide variety of criminal activity and are usually done for financial gain. Even in cases where the fraud doesn’t involve a lot of money, it can carry heavy penalties, including jail time, fines, and restitution to the victims of fraud. Fraud can be prosecuted as a state crime, but it can also implicate federal criminal charges, tried in federal court, with prison time served in a federal prison.
Some of the most common fraud charges in California involve:
- Auto Insurance Fraud
- Check Fraud
- Credit Card Fraud
- Identity Theft
- Real Estate Fraud
- Unemployment Insurance Fraud
- Welfare Fraud
- Workers Comp Fraud
The penalties for a fraud conviction will often depend on the victim, the extent of the fraud, how many times fraud was committed, and whether the defendant had a prior criminal record. It can be treated as a misdemeanor or a felony. It could also be prosecuted in federal court, which may result in stiffer penalties. If you are ever arrested on suspicion of fraud, you should consider talking to a defense attorney as soon as possible to ensure you have a chance to have your charges reduced or dismissed.
Auto Insurance Fraud
Fraud involving auto insurance can include trying to collect insurance for intentionally damaging your vehicle, submitting a false insurance claim, or even staging an accident. Felony auto insurance fraud charges can mean up to 5 years in prison and thousands of dollars in fines.
Check fraud is very common in California, and can involve small sums of money on up to hundreds of thousands of dollars. Check fraud involves issuing checks while knowing there isn’t enough money in the account or the act of signing another person’s checks. When the victim of check fraud is a senior citizen, this can result in additional penalties.
Credit Card Fraud
Credit card fraud can involve buying or selling false credit cards, stealing and/or using another person’s credit card, or using a credit card with no intention of ever paying back the creditor. Credit card fraud can be prosecuted as a state or federal crime.
Identity theft is a growing crime across the U.S. It can involve sophisticated crime syndicates who gain access to the identifying information of hundreds of people at a time. It can also involve simply going through a person’s trash to try and get financial or biographical information to commit fraud.
Real Estate Fraud
With property and housing prices so high in California, real estate fraud often involves large sums of money. Examples include the use of false information to obtain a mortgage or forging property deeds. Fraud in a real estate transaction can result in felony criminal charges.
Unemployment Insurance Fraud
California treats fraud against the state especially seriously. Unemployment insurance fraud involves someone making a false claim, working while claiming unemployment, using false identification to get benefits, or making misrepresentations in order to get higher benefits. Fraud of small amounts of money may be treated as a misdemeanor, but larger amounts can increase the crime to a felony.
Welfare fraud also involves fraud against the state through gaining access to welfare benefits. Welfare fraud includes providing false information to get money or benefits for housing, food, or medical treatment. Examples include submitting claims for individuals that don’t exist or failing to report income.
Workers Comp Fraud
Workers’ compensation fraud is another growing area of fraud in California. This involves making false statements about injuries or employment in order to gain workers’ compensation benefits. This can be charged as a felony with up to five years in prison including tens of thousands of dollars in fines.
Defenses to Criminal Fraud Charges
There are a number of legal defenses available to allegations of fraud. Since each case is different, you should speak with your California criminal defense attorney and he or she will be able to identify what the best defenses in your specific case. If you are being investigated for fraud, or have been criminally charged with fraud, an experienced California criminal defense attorney will defend your rights and fight to get your charges reduced or dismissed entirely.
Auto Insurance Fraud
California Penal Code 548 defines auto insurance fraud as willfully destroying, abandoning, or disposing of any property (including vehicles) which is insured against loss or damage at the time with intent to defraud the insurer.
To be convicted of auto insurance fraud the following must be true:
- The defendant willfully (deliberately) destroyed/abandoned/hid/otherwise disposed of a vehicle,
- The vehicle was insured against loss or damage, and
- The defendant intended to defraud the insurer by filing a claim for the vehicle,
Depending on the nature of the circumstances, auto insurance fraud may be charged as a felony or a misdemeanor. Misdemeanor auto insurance fraud can carry a jail term of up to one year in county jail along with a fine of $1,000, while felony auto insurance fraud can carry a jail term of up to 5 years in prison, along with $50,000 in fines.
Example of Auto Insurance Fraud:
A man finds himself in a financial bind and cannot afford his car payments. He decides to take a trip into rural area Mexico and abandon his car. He takes a bus ride back to the United States, where he reports the car as stolen, files a claim with his insurance company, and collects the payout on the vehicle.
The California Penal Code 476 defines check fraud as making, writing, passing, possessing, attempting to make, attempting to write, or attempting to pass a fake, altered, or forged check in order to obtain cash, property or services with fraudulent intent.
To be convicted of check fraud the following must be true:
- The defendant made, wrote, passed, or possessed the check (or attempted to do one of these things with a check);
- The check was counterfeit, altered in some way, or contained forged elements (such as the signature); and/or
- The defendant used the check in an attempt to obtain cash, goods, or services;
- The defendant knew the check was in some way defective and was attempting to use the check regardless of this fact.
Depending on the circumstances of the case, check fraud may be charged as a felony or a misdemeanor. Misdemeanor check fraud is punishable by up to one year in county jail and a fine of $1,000, while felony check fraud is punishable by up to three years imprisonment and a fine of $10,000.
An Example of Check Fraud
A young woman provides babysitting services for a neighborhood couple. The couple writes the woman a check for $50.00 to compensate her for her services. She alters the check to read “$150.00” and attempts to cash it at her bank. The woman could probably be charged with check fraud.
Credit Card Fraud
Credit Card Fraud Defined
California Penal Code 484e, 484f, 484g, 484h, 484i, and 484j regulate prohibited activities relating to credit card fraud. Though there are many statues in place to account for the nuances of credit card fraud, fraud occurs when a person uses a credit card or account number that he or she does not have permission to use. Such uses might include the purchase of a good or service, but also include forging, altering, or stealing cards.
To be convicted of credit card fraud, the defendant must have intentionally used a card or an account in a fraudulent way.
Penalties for credit card fraud range from three years in a county jail and a maximum $10,000 fine to less than one year in a county jail and more than a $1,000 fine. The penalty received depends on the type of credit card fraud committed. Fraud valued at $950 or over is considered grand theft and is subject to the maximum penalty.
An Example of Credit Card Fraud
A man is on his way home from work when he discovers a credit card on the sidewalk. It has a picture on the front which resembles him – same scruffy beard, same patchy hair line – but it is not his card. Later that night, he stops by the grocery store. When he opens his wallet to pay, he decides to use the card he found instead of his own card. This man could most likely be charged with credit card fraud.
Health Care Fraud
Healthcare Fraud refers to certain practices in which false information related to healthcare claims is submitted to a payor in order to illegally obtain a profit. California Penal Code §550 articulates a series of such prohibited fraudulent practices. Some of the most common practices prosecutors target in these cases include billing for medical services that a patient did not actually receive, billing for more extensive medical services than a patient actually received, and billing multiple times for a single procedure.
It is important to note that in order to obtain a conviction on charges of healthcare fraud, the prosecution must demonstrate that the defendant intended to defraud a payor. This presents an opportunity for those charged to put forth a defense attacking the intent element when an honest mistake has resulted in a prosecution for healthcare fraud.
Depending on the amount at issue, healthcare fraud can be classified as either a misdemeanor or a felony. If the amount at issue is less than $950, the offense is categorized as a misdemeanor. If the amount at issue is greater than $950, the offense is classified as a “wobbler”, meaning that it will be within the discretion of the prosecutor to pursue misdemeanor or felony charges. If charged as a misdemeanor, penalties for healthcare fraud can include up to 6 months imprisonment in county jail and/or a fine of up to $1,000. If charged as a felony, penalties include a term of imprisonment of two, three or five years and/or a fine of up to $50,000 or double the amount of the fraud.
Identity theft is defined as willfully obtaining “personal identifying information… belonging to another person, and using that information for any unlawful purpose including to obtain, or attempt to obtain, credit, goods, services, real property, or medical information” without the consent of that person.
In short, identity theft is the act in which a person uses personal information of another without consent, for unlawful purposes, particularly economic gain. Also included in this statute is possession and retaining of this personal information with this intent.
In order to be found guilty of Identity Theft, the following must be true:
- The defendant is in possession of another’s personal information and
- The defendant possess such information for an unlawful purpose.
Penalties for Identity Theft
Conviction generally results in punishment by a fine, by imprisonment in a county jail not to exceed one year, or by both a fine and imprisonment for most cases, depending on severity.
An Example of Identity Theft
A nurse is hired to provide in-home care for an elderly patient. She obtains personal information about her patient, including social security number and date of birth. She uses this information to take out a personal loan in order to buy herself a car.
Real Estate Fraud
California Penal Code 487 defines real estate fraud as unlawful taking of someone else’s property; when the property taken is valued at more than $950, the theft is considered grant theft. California real estate fraud covers mortgage, foreclosure, rental property, deeds to real estate, and property “flipping”. Flipping takes place when the value of a property is wrongly inflated based on a fraudulent appraisal.
To be convicted of Real Estate Fraud the following must be true:
- The defendant knowingly and intentionally deceived a real estate owner or mortgage lender by making a false or fraudulent representation; and/or
- The victim allowed the defendant take possession and ownership of the property or loan proceeds because she/he relied on false representation.
Depending on the circumstances of the case, real estate fraud can be a misdemeanor or a felony. Misdemeanor real estate fraud maximum sentence is one year in county jail and a fine of up to $1,000. Felony real estate fraud maximum is three years in jail.
Examples of Real Estate Fraud
A man wishes to rent an apartment, but knows that he does not meet the leasing company’s requirements for credit score and income. When he meets with the leasing agent, he gives his brother’s name and social security number for purposes of a background and credit check. After passing the check, he signs a lease and takes possession of the apartment. This man could probably be charged with real estate fraud.
Unemployment Insurance Fraud
The State of California defines the act of Unemployment Insurance Fraud as willfully making a false statement or representation, to knowingly fail to disclose a material fact, or to use a false name, false social security number, or other false identification to obtain, increase, reduce, or defeat any benefit or payment, whether for the maker or for any other person.
In more simple terms, knowingly and willingly using falsehoods to tamper with how unemployment insurance benefits are received or distributed is considered unemployment insurance fraud.
In order to be found guilty of Unemployment Insurance Fraud, the following must be true:
- The defendant made a false representation or failed to disclose a material fact, and
- The defendant did so in order to obtain some manner of unemployment benefit or payment.
Conviction of Unemployment Insurance Fraud can result in punishments of up to $20,000, or jail time up to a year, or possibly both. Individuals and employers can be held responsible for prosecution and investigation costs as well.
Example of Unemployment Insurance Fraud
Dwight was fired and collected unemployment, but decides to report himself unemployed for another two weeks to continue collecting benefits after starting work at a new job. He could probably be charged with unemployment insurance fraud.
The California Welfare and Insurance Code prohibits deliberately misstating information or failing to provide relevant information in order to obtain unwarranted welfare benefits; applying for benefits under more than one name or by filing multiple applications to obtain multiple benefits. It also prohibits purchasing/selling and creating counterfeit food stamps and/or food stamp applications. These statutes ensure state programs intended to assist those in need are not abused.
To be convicted of welfare fraud, the following must be true:
- The defendant provided false information (or intentionally omitted relevant information).
- The defendant did so in order to obtain welfare benefits. or
- The defendant sold/counterfeited/purchased food stamps or an application for the food stamp program.
Depending on the circumstances of the case, welfare fraud may be a misdemeanor or a felony. Misdemeanor welfare fraud can be punishable by a jail term of less than one year and fines. Whereas felony welfare fraud can be punishable by a significant prison time and steep fines.
Examples of Welfare Fraud
A woman works two jobs; a daytime job as a sales clerk in a department store and an evening job as a nanny. For her work as a nanny, her employers pay her in cash. She fills out an application for welfare benefits from the state of California. Despite the fact that she is required to disclose all sources of income, she only reports her department store job as her nighttime position is “under the table.” This woman could most likely be charged with welfare fraud.
Workers Comp Fraud
“Workers Compensation” refers to a system of insurance which provides payments for medical expenses and loss of income when a worker is injured during the course of their job duties.California law prohibits anyone from providing (or helping another provide) false information about a claim in order to obtain benefits; also prohibited is the practice of fraudulently submitting multiple claims for the same injury.
To be convicted of worker’s compensation fraud the following must be true:
1. A worker provided (or assisted another in providing) false documentation related to an injury / workers’ compensation claim; or the worker submitted multiple claims in an attempt to obtain payment from worker’s compensation insurance, all for the same injury.
- The worker presented the information for the purpose of fraudulently obtaining benefits
Workers’ compensation fraud can be charged as either a misdemeanor or a felony at the discretion of the prosecutor. If charged as a misdemeanor, the offense can carry a penalty of jail time up to one year; if charged as a felony, the offense can carry a term of imprisonment of three to five years, along with significant fines.
Examples of Workers’ Compensation Fraud
A delivery driver plays a game of basketball after work on a Thursday. During the game, he falls and injures his back. At work on Friday, he reports to this superiors that he fell while unloading boxes from a warehouse into his truck, in order to have all co-payments covered by his company’s workers’ compensation insurance firm. In this case, the driver could probably be charged with workers’ compensation fraud.